Judge Thrash’s written opinion in January was much more extensive than his oral opinion at the end of the fairness hearing. It was also much more critical of objectors to the settlement, including Frank.
“We’re gratified that the court recognized the problems we identified and went beyond the special master’s proposal to return millions of dollars to class members," said Frank.
The most promising of those arguments seems to me to be CCAF’s assertion that Equifax and class counsel failed to acknowledge and address potential conflicts among class members. The brief uses Frank and Watkins, the named objectors, to illustrate that point. In Watkins’ home state of Utah, he might be entitled to statutory damages of as much as $2,000 in claims arising from the Equifax breach. Frank, who lived in Washington, could have claimed statutory damages of $1,500. But New Yorkers in the Equifax class would be permitted only $50 for claims under New York general business law.
The fee request is the highest of any data breach settlement, with fee awards approved in similar cases against Anthem and Yahoo totaling $31 million and $30 million, respectively. In those data breach cases, U.S. District Judge Lucy Koh of the Northern District of California questioned the amount of billing and the number of law firms involved. Those same problems exist in the Equifax settlement, Frank said.
Frank has also argued for sanctions against the law firms and an injunction barring them from securing attorneys fees without court approval. He said he can’t afford to intervene in each of the many dozens of cases that are resolved with mootness fees. “It’s not enough to have this whack-a-mole game that will not deter the behavior,” he told Law360.
Frank said in an email that the problem with Judge Rogers' previous ruling was not that the judge didn't explain her reasoning but that her reasoning "was just legally wrong." He said he's waiting to see what plaintiffs' lawyers from Lieff Cabraser Heimann & Bernstein – who defended the lithium ion settlements at the 9th Circuit – do next. "We're still evaluating our options," he said. "It would be odd to move for rehearing of a decision I just won. Then again, I've been known to be odd."
All three judges sitting on the panel expressed doubts about the settlements' approval. Aside from Judge Bybee’s comments, U.S. Circuit Judge M. Margaret McKeown said the judge’s order approving the settlements was “conclusory,” and Judge McKeown expressed concerns that Judge Gonzalez Rogers didn’t explain her reasoning for finding that the deals were fair.
With that kind of markup, Tigar said the use of contract lawyers could be considered a profit-seeking scheme. Heimann argued that the work and the overhead costs for staff and contract employees are the same in regard to training, supervision and providing workspaces. Tigar said the law firm wouldn’t contract out staff if it weren’t more profitable.
The decision is a victory for Ted Frank, the litigation director at the Hamilton Lincoln Law Institute and prominent critic of many class-action settlements. Frank said the money awarded to the privacy groups, under a legal doctrine known as “cy pres,” should have gone to class members like himself. He drew support from a bipartisan group of 13 state attorneys general led by Arizona’s Mark Brnovich.
Tigar also set out to address another objection mentioned in Frank’s opposition over a 5% fee allocated to 12 law firms who brought similar cases in Delaware courts. “The gravy train is so heavy that co-lead counsel has agreed to pay law firms that brought other cases even where they provided no common benefit, who represent plaintiffs who lack any colorable claims,” Frank wrote.